Moody’s Investors Service gave the Asian Infrastructure Investment Bank (AIIB) its highest possible rating on Thursday, with a stable outlook. The triple-A rating was given because of “the strength of AIIB’s governance frameworks, including its policies on risk management, capital adequacy and liquidity,” Moody’s said in a statement. The AIIB, which has 80 member countries, was established to help meet the estimated $26 trillion need for infrastructure spending in Asia through 2030, while also demonstrating that a China-led institution can meet international standards for best practice.
The United States and Japan, both members of the Manila-based Asian Development Bank (ADB), have not joined the AIIB. Moody’s said it expected the AIIB’s liquidity position would be as strong as other highly rated multilateral development banks (MDBs) but the rating could face downward pressure if the AIIB’s underwriting and risk management processes did not evolve in line with the other highest-rated MDBs.
The credit rating assessment “rests on the assumption that AIIB will retain full operational autonomy from its largest shareholders, including China,” the Moody’s statement said. “Full autonomy also implies immunity from expropriation, moratoria, and capital account restrictions.” China has tightened controls on money leaving the country to support the yuan and stem a slide in its foreign exchange reserves.
Moody’s downgraded China’s credit ratings in May for the first time in nearly 30 years saying it expected the financial strength of the economy to erode in coming years as growth slows and debt continues to rise.